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Consumer Product Companies Are Facing an Identity Crisis
It’s time to transform to experience brands in today’s era of Total Commerce
The consumer packaged goods (CPG) industry is changing—fast. Digital has redefined shopping as we know it. As new digital entrants are rapidly taking market share and retailers are becoming competitors, CPG companies need to take swift action to ensure competitive advantage today and tomorrow. This calls for re-examining the right route to market and distribution challenges because the mass market brand-building and retail partnerships of yesterday are no longer enough.
As consumers continue to live more digitally centered, online is evolving from being just another distribution channel to completely redefining the path to purchase for CPG companies. But although 90% of overall CPG growth in 2017 came from online sales,1 the top 20 CPG companies worldwide still have a disproportionately overall low share of digital sales volume. In fact, Nestlé, Procter & Gamble and Unilever were well below 10% in 2018.2 Many CPG companies have not begun to reap their full potential in digital.
Marketplaces like Amazon and Alibaba are influencing the change, and they are also seizing the opportunity. With more than half (54%) of product searches happening on Amazon nowadays,3 these tech giants have contributed to a completely redefined end-to-end shopper journey. As the go-to starting touchpoint within the value chain, these companies are owning brand visibility and delivering the last mile with private labels in all different categories.
Having a great product and strong retail partnership is no longer enough to build and maintain consumer relationships. It is time for CPG companies to regain control of the customer journey and deliver experiences that create meaningful value for consumers. So in the wake of this new identity crisis, every CPG company must ask: How do we move from product manufacturers to one-face-to-the-consumer experience brands?
The time is now for CPG companies to embrace their identity crisis and use it as an opportunity to reinvent themselves in order to gain market traction and thrive.
CPG businesses must deliver meaningful value to their consumers to stay relevant and maintain their market positioning. Doing so requires a holistic attempt to commerce that has a full-funnel approach, including the right balance of distribution channels and tightly integrated routes to market.
Too often, different channels are siloed in different parts of the business, serving various disciplines and constrained by historical organizational fit rather than following today’s omni-channel customer. These are no longer standalone activities engaging different customers, so companies need to shift their thinking and create a strategy that focuses on the consumer across the entire funnel and drives connections at all points of the journey.
What role should each of my routes to market play and what should my investment be? <br><br> How do I win on the virtual shelf? <br><br> What role should my brand.com play? <br><br> How do I connect offline with online? <br><br> How do I create a one-face-to-the consumer brand across all channels while leveraging each channel individually?
As shopping is redefined and retailers are increasingly becoming competitors, CPG companies need a holistic approach to address today’s realities and prepare for a rapidly evolving future. A Total Commerce approach integrates and aligns brand.com, partner e-commerce and retail and follows the consumer across each one for a holistic experience.
If most consumers are going to Amazon to search for products, does a brand website really matter? The answer is a resounding yes—and perhaps now more than ever. As CPG brands seek to regain control over the shopping journey and establish a stronger relationship with consumers, their brand websites are becoming a most strategic touchpoint.
In a world where consumers discover and experience CPG products most often through intermediaries, it is essential to establish a direct platform to educate, engage and build trust with existing and potential customers. At a fundamental level, brand websites serve a common purpose to all CPG brands: they act as a single source of truth.
E-retailers are a critical part of the business and account for significant revenue as they are increasingly becoming a key driver of product awareness and consideration. But how can you get the most from these partnerships?
The key to driving offline and online sales is to optimize your presence across e-commerce sites and own the brand experience, even though sales are happening on 3rd party platforms. Know who you are selling through and what you want to sell through this partner. The CPG company’s packaging and merchandising strategy may differ depending on the partner. How should content be tweaked to show up better in search? Should products be grouped versus sold individually? These decisions will vary depending on whether you are selling to a once-a-week shopper on Tesco versus a bulk item shopper on Amazon.
Creating and optimizing content can help increase visibility during common product searches and generate new sales conversions. Understanding how a consumer shops for a particular kind of product will be critical to create the right product description and appear on top of search results, while attractive brand imagery will play a key role in driving up conversion.
Despite the growth in online sales in recent years, traditional retail channels will drive a large share of sales for many years to come. Even so, Forrester states that 53% of offline purchases are directly influenced by digital—a figure that will grow to 58% by 2022.4
These statistics underscore the criticality of brick and mortar sales to the bottom line but also the importance of leveraging digital tactics to drive offline sales. CPG companies need to use digital to connect the path to purchase, integrate the online and offline experience and turn shoppers into brand advocates.
Plan in a journey-driven way. Consider all the customer touchpoints—digital and not. Capture data about the customers: what do they buy, when and on what channel? Create an experience map to determine how the CPG can recognize a customer when they move from channel to channel and determine how to deliver greater value at every touchpoint.
The current identity crisis doesn’t have to be a business crisis for CPG companies. But it is time for action – not words. As eRetailers are winning the war in convenience, CPG businesses will need to win the war of value. This means taking a full-funnel approach to identify their own strategy to succeed across the three pillars of Total Commerce.
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